Last Chance For The Old Recording Industry... But Plenty Of Excitement In The New Music Industry

from the time-to-be-optimistic dept

I spent Monday at the wonderful SanFran MusicTech Summit and I have to admit that I came away quite optimistic. You may recall earlier this year that my takeaway from MidemNet was how optimistic people were becoming -- but how much the old school industry folks then took that optimism and twisted it into something bad (saying things like "we have to stop treating our fans as criminals, but we need to stomp out piracy at any cost!"). In contrast, I have to say that after the SF MusicTech event, I'm back to the optimistic viewpoint, though I recognize there's still plenty of shaking out to occur.

Terry McBride, whose insights always are worth thinking deeply about, made a comment that this was "the last chance for the music industry" to stop screwing things up and pissing off customers, and that it was time to get it right: meaning stop treating customers as criminals, stop focusing on the sale of things that people don't want to pay for and stop worrying about copyright (he even agreed with David Bowie's comment that copyright was over). I agree with much of what McBride said, with one exception: this isn't the last chance for the music industry. The music industry is doing great -- with more music than ever before being produced and available to fans, and more musicians than ever before being able to connect directly with fans and put in place a business model that works for them, instead of getting worked over by a major label with a dreadful contract. Instead, I'd argue that it's the major labels who have one more chance... and even that may be iffy given how badly they've screwed some stuff up in the past decade.

But much of the rest of the event showed why there's so much reason for optimism. There are so many different startups entering the space these days that it's honestly difficult to keep track of them. And while the market is certainly confusing, we'll start to see some clear leaders shake out of the pack in the next few years. But, combine it all and these startups provide all of the tools that any musician today needs to record, perform, build a fan base, manage a fan base, tour, manage a tour, connect with fans, communicate with fans, transact with fans, promote, distribute, analyze and share. Basically, absolutely everything that you used to need a record label for is showing up from a hodge podge of startups. They don't all necessarily work well or work together, but that'll change over time. On top of this, there are additional tools that let you do things that simply weren't possible before, such as providing better, more detailed recommendation systems and analytics. Among the cool or compelling companies I saw or spoke with at the event were Band Metrics, Topspin, Bandize, 100000Fans, Instinctiv, Jamendo, Drop.io, thesixtyone... and those were just the ones that I'm remembering off the top of my head. There were at least two dozen other interesting startups as well.

Again, this doesn't mean there's no room for a label anymore -- but the role of that label changes. Some bands won't need labels at all, and will be able to manage everything themselves using these tools and services. Others will rely on label reps to help piece all of the different services together, so they can focus on the music. But the routes around the old system are growing at a phenomenal rate. On top of that, there were some major label representatives who actually seem to recognize all of this, even if not all of their colleagues agree.

So while I am still nervous about what the old guard and its lobbyists will do to laws around the globe, the next generation is clearly growing up from below. It's quite messy right now, but it's coming. Fast.

Los Angelean Culture

I find myself constantly amazed at

1) Terry McBride's insight
2) The level of protectionism that the culture of Los Angeles brings.

It remains possible that Los Angeles and perhape even New York were first identified as areas to create some sort of societal test, conjured up a few hundred years ago around a brandy to see how many people can be packed into a given area and still have their needs met. I believe that the test included the ideology of Classical Liberalism as it's foundation.

However, it seems that Henry Ford threw a monkey wrench in the whole thing when he built his first Plant in the Midwest.

When it comes to Los Angeles it seems, (and this is the commentary of only one observer) over time, basic needs were somewhat skewed. An extreme to Property was perhaps taken. But these extremes possibly even grow today.

Perhaps the extreme property approach is short served and not useful to most. I don't know. I'm not from these parts. I also think that the amount of sunlight a person gets dictates how stupid they are too. Native Floridians are a very interesting group of people.

But as an example, one could drive thru Hollywood and see studio after studio, and across the street exists T-Shirt stores, and a gas station with barbed wire around the back. However, stopping at a local liquor store, you are not enabled to have interaction with the cashier, as they may be behind a 1.5 inch thick plexiglass window, possibly to protect the customer, I'm sure, because giving a $100.00 dollar bill to the cashier just isn't safe enough.

To assist in this transaction, there's an intercom system which you press to ask for the price of whatever your would like to purchase behind the counter or otherwise to help you make an informed decision to buy something.

But, should you find the items you want to buy, you place them on a lazy susan of sorts, which is in front of the cashier.

Is this the way the rest of America works?

No. In fact, many people escape from Hollywood and Los Angeles when ever they can for the simple fact that it allows them to be themselves.

Back in the 1950s, actors and artists were indentured servants. Work was owned by the studio that paid you. You were expected to maintain certain physical characteristics and also perform where and when the studio or label expected. It was something along the lines of Indentured Servitude.

Today, people are starting to realize that many things haven't changed from the 1950s mentality of control, and people are coming to realize that artists, performers, writers are all people, with a little dark spot here and there, and we will accept that.

I worry mostly about the culture of a purebread Los Angelean-- that what the do and what they present to the American Public as their perspective of life is the ideal, when clearly it is not.

Sometimes you need to disconnect yourself from the business and re-join reality.

Re: Los Angelean Culture

"any" musician is an exaggeration

"these startups provide all of the tools that any musician today needs to record, perform, build a fan base, manage a fan base, tour, manage a tour, connect with fans, communicate with fans, transact with fans, promote, distribute, analyze and share"

That's actually only true for certain kinds of musician, and certain kinds of music. Small groups and solo performers can certainly tour but I'm unaware of any cases where classical orchestras have been able to tour fully-funded by fans.

I'm not saying it's impossible or that there isn't a business model that will develop. But there is a certain homogeneity in the structure of the groups that have succeeded in what is after all the most obvious model. As I'm sure you've pointed out in the past, the groups that are embracing these business models are providing special value for their fans in a way that's not far off from what successful bands have been doing for decades.

Many other musicians can't physically (or choose not to) tour, or make music that has one-hundredth or one-thousandth the potential audience of Radiohead because it isn't pop or "product". O knowing oracle, do you know a business plan for them?

Re: Los Angelean culture

Re: "any" musician is an exaggeration

It seems worth noting that many performers seem to be tired of being considered as indentured servants: running everything thru the label or whomever they are contracted with before they even go to the bar or to Las Vegas, or wherever they feel free.

I am also sharing with you candid ideology which I believe is behind Los Angeles' extreme views of property rights and how they do not fit within the framework of the United States Copyright and Patent System as a whole. Behind this experience exists a culture few would put up with.

We don't need stronger Property Rights. We need better Business People who don't pass the fucking buck and say it's an enforcement problem. If you can't make a customer to pay, well, fuck 'em let them take the crap and call it a day. But the only way to make a dollar is to put up bulletproof glass, add DRM or something else, well, they should have closed the store.

But when the major studios have razorwire setup around them, I don't know what's worth more:

The $20.00 American Idol Ticket protecting the idiots who jumped the fence or the $20 ticket itself.

Now, I've never watched an entire American idol. I don't worship Idols and furthermore, I don't think there is an Idol above Christ himself, so to think an American idol exists just really, really angers me.

But seriously, man. Y'all got your priorities out of line. Drive around Staples Center, where this "idol" is being filmed. (note lower case spelling) sometime.

Any regular American would ask "Why the hell is this acceptable" This place is a fucking wastepit.

Re:

This is why...

This is why the band ICP created their own label. I remember a quote from one of them saying (and I am paraphrasing) that "We make more money selling 14,000 CDs through my own label than we ever did selling a million CDs through a big record label, we don't have to work as hard for it, we have creative flexibility, and we can connect with our fans better this way."

Now I think this is very telling about just how corrupt the major labels are and very telling about how successful artists can be going a different route. Even if that route is making a label yourself.

Re: "any" musician is an exaggeration

Many other musicians can't physically (or choose not to) tour, or make music that has one-hundredth or one-thousandth the potential audience of Radiohead because it isn't pop or "product". O knowing oracle, do you know a business plan for them?

We've actually discussed plenty of business models that don't involve touring. The Josh Freese model we discussed didn't involve touring and started with a small audience. I included touring info because that's ONE important way to make money, but hardly the only one.

RE:

I am also sharing with you candid ideology which I believe is behind Los Angeles' extreme views of property rights and how they do not fit within the framework of the United States Copyright and Patent System as a whole. Behind this experience exists a culture few would put up with.

The next years are going to bring some kind of disruptive total disconnect between the old and the new. Laws are being constructed that technology/creative smarts laugh at and work around easily. Record companies are on the y axis going down and the rest of us on x moving forward.

#14, the only thing stopping a musician from making money is the musician himself. It is up to the musician to find a way to make money , it is not up to the public to just throw money at the musician because he(she) is an "artist" that feels that they deserve. When a musician decides they want money for their music, fine, they need to become a business person and just like any business they have to find the means to persuade the customers to buy, if they don't then they fail just like any other business.

Re:

sorry but you mean that just the acts of writing and recording a great song isnt enough? there is no business selling music anymore, everyone has to be a circus act like josh freese and play miniputt with people. its the right business model.

the Josh Freese model

Yes, Josh Freese. Well, we all would like to be Josh Freese, just as many of us would like to have been born to a prominent family (with our mom sharing a board of directors with the chairman of IBM) and have a million-dollar trust fund so we could drop out of Harvard to start Microsoft, but both of those possibilities seem equally unlikely.

Josh Freese's business model depends on being a member of famous rock bands and several tours, which just begs the question. And although I'll bet when he tours he has a lot of luggage, he is only one person, not twenty to sixty performers like an orchestra. So that's two questions unanswered, and a new one added.

- What's a viable business model for individuals or groups that don't tour, require exceptional resources to tour, or play music that isn't what you'd expect to hear on the radio?

- How can the next Josh Freese fund himself while he tries to become Josh Freese? Is there a way for a relative unknown to earn $250 for plastic discs and lunch that doesn't require firearms, relatives buried in remote places or powerful drugs?

Re: the Josh Freese model

Yes, Josh Freese. Well, we all would like to be Josh Freese, just as many of us would like to have been born to a prominent family (with our mom sharing a board of directors with the chairman of IBM) and have a million-dollar trust fund so we could drop out of Harvard to start Microsoft, but both of those possibilities seem equally unlikely.

Gates is an extreme example. We have quite a supply of successful business owners in this country who dropped out of college to start their own business *without* such assurances. Don't bother making excuses - if you have an idea and the will, go out there and execute it. You might win, you might lose, you might break even and cut out to start something new. In any case, you're doing something rather than whining about how unprivileged you are.

There are probably few to no business models in the new culture for handling large groups like an orchestra well. We'll probably have to continue funding them through patronage and taxes, like we do to a good extent now.

- What's a viable business model for individuals or groups that don't tour, require exceptional resources to tour, or play music that isn't what you'd expect to hear on the radio?

Well, if *all three* of those are true together, you're a bit hard up. ^_^ You can still make it, but you've got to be good and lucky.

However, there are many ways to work around these weaknesses. First, let's address the last. Being a radio-pop band is *far* from necessary for success. Techdirt has highlighted *many* bands who have gotten successful using in the digital economy while not being pop. In fact, non-pop bands were the first to really start pushing the boundaries of the new models, precisely because bands who *did* sound like what you hear on the radio could get signed by labels.

As for touring, you don't *need* to tour. It's just an obvious and easy way to make money. However, if you can do 'targeted' touring, like what Coulton does where he requires enough fans to get together in an area requesting a concert before he parachutes in, you can get much of the benefit of touring while removing much of the risk. You can even do backyard/house concerts, which a few artists have successfully done - just charge some appropriate amount to the homeowners, and let them charge admission to recoup it themselves. They'll be sure to bring in plenty of friends who can become new fans for you.

- How can the next Josh Freese fund himself while he tries to become Josh Freese? Is there a way for a relative unknown to earn $250 for plastic discs and lunch that doesn't require firearms, relatives buried in remote places or powerful drugs?

Josh Freese is obviously banking on his existing celebrity to sell the largest packages, but it's relatively easy to gather a decent chunk of loyal fans who'll plunk down serious change for some premium swag. Some CDs and lunch probably aren't sufficient for normal people to charge $250, but drop the price and up the value a bit (due to the loss in value derived from celebrity), and you've got yourself a sellable package.

There are many, many ways to make money in the digital economy, and it's surprising how many of them fundamentally revolve around personal connections. In the end, though, not everyone can make money. This is just how the world works. One of the nice things about the new models is that they allow much larger numbers of people to make good money, at the cost that we'll lose the infrastructure to make a small number of people extremely rich. It's still possible to be super-rich under the new models, just less likely.

I'm pulling numbers out of my ass here, but it's something like, under the old model, 1% of people got super rich, 5% of people made okay money, and the rest either aren't good enough, or got shut out by the labels. Under the new models, .1% of people get super rich, 10% of people make okay money, and the rest either aren't good enough or just plain can't monetize themselves. So you have something like twice the chance to be successful in music using my ass-numbers, even though there's only a tenth the chance of striking gold. I'd consider that a fair trade-off, and I suspect that the real numbers are actually skewed substantially more in the new model's favor - either my numbers for the old model are too high (likely), or my numbers for the new model are too low (possible).

chicken versus egg. nobody will pay for lunch with nobody. how is he anybody? because he is involved in big music acts. How did they get big? music business. none of this is worth a pinch of crap until there is no music business then you see who will pay. most people will be so unknown that they will have to pay people to take them to lunch.

it is easy to stand on top of the mountain the music business has built in 50+ years and wave an independant flag, but it would be different if these guys started in the valley and waved that flag. nobody would see them and nobody would care.

Re:

it is easy to stand on top of the mountain the music business has built in 50+ years and wave an independant flag, but it would be different if these guys started in the valley and waved that flag. nobody would see them and nobody would care.

Ha! Look, we've pointed to examples of artists big, medium and small that have all made this work. Pretending it only works for the big artists is folly and ignorance.

Re: the Josh Freese model

Josh Freese's business model depends on being a member of famous rock bands and several tours, which just begs the question.

Um, actually, it doesn't. The whole point of what he did was that most people outside of the industry had no clue who he was, but his model got them to pony up. Thanks for playing.

And, we've shown numerous artists who weren't Josh Freese, big, medium and small who used similar models and were successful. Are you going to find exceptions for each and every one of them? Or are you going to realize that the exceptions are the rule?

What's a viable business model for touring groups of greater size than your typical pop/rock combo?

If you want help with your big band, you're free to pay us to help. :)

What's a viable business model for individuals or groups that don't tour, require exceptional resources to tour, or play music that isn't what you'd expect to hear on the radio?

Again, we've discussed this. In rather great detail.

How can the next Josh Freese fund himself while he tries to become Josh Freese? Is there a way for a relative unknown to earn $250 for plastic discs and lunch that doesn't require firearms, relatives buried in remote places or powerful drugs?

Nice to miss the entire point of Freese's model. Man. I find it amusing that people keep looking for exceptions as more and more musicians actually figure this out. Can't wait to see you come back and admit to being wrong as this model becomes standard.

Re: the Josh Freese model

The whole point of what he did was that most people outside of the industry had no clue who he was, but his model got them to pony up. Thanks for playing.

And, we've shown numerous artists who weren't Josh Freese, big, medium and small who used similar models and were successful. Are you going to find exceptions for each and every one of them? Or are you going to realize that the exceptions are the rule?

Actually I'm embracing the exceptions. You seem to think I'm disagreeing with you instead of asking you questions so I can find out what you think. I'm a major beneficiary of the explosion of technology and the collapse of the recording studios and major label gatekeepers. I've been recording at home for nearly thirty years now and can deliver high-quality recordings indistinguishable from major label product. I think Xanthir's conclusions are 100% correct, and I think Techdirt is generally a good source of information (though the constant repetition of your positions and sense of being embattled by larger forces than yourselves has in the last six months led to an "us vs. them" attitude that's started to erode the quality of the data).

If you want help with your big band, you're free to pay us to help. :)

Thanks for admitting you don't have an answer, but you'll come up with one for money. That's how you pay the bills, I know, and more power to you. But do you see how your statement might lead a reader to believe that the triumphant growl that "these startups provide all of the tools that any musician today needs" is perhaps a wee bit overstated?

Again, we've discussed this. In rather great detail.

Lovely. Humor me and link a couple, instead of rolling your eyes and puffing out your chest. Imagine you were trying to convince somebody rather than making them salute.

Nice to miss the entire point of Freese's model. Man. I find it amusing that people keep looking for exceptions as more and more musicians actually figure this out. Can't wait to see you come back and admit to being wrong as this model becomes standard.

Okay, so you have these cumulative exceptions that are ultimately the rule that make up the model that will be a standard. (Like slime molds, rhetoric can creep.) You can use free product to gain people's attention to sell them a scarce good, be it physical (a CD, a certificate), a service (sing backup on this song, meet me after the show), or notional (I'll contribute profits to a fund for blogging megalomaniacs). Got it. I agree. I just thought you'd have something more to say.

Waiting for me to "come back" (I read Techdirt nearly every day and have commented occasionally over the last few years) and admit I'm wrong for something I don't believe is probably a waste of your valuable time. But then I'm not as easily amused as some.

Re: Re: the Josh Freese model

Thanks for admitting you don't have an answer, but you'll come up with one for money.

I've always said that the answers for each individual situation differ, so if you want advice on something specific, it requires the details of the situation, and that takes time. My time costs money.

Lovely. Humor me and link a couple, instead of rolling your eyes and puffing out your chest. Imagine you were trying to convince somebody rather than making them salute.

Again, finding time to repeat what we've said 100 times isn't a good use of my time, frankly. But I am serious -- we've discussed lots of models that don't involve touring, and with a little imagination, you can figure out how to apply them to your model as well.

Just start focusing on what's infinite and what's scarce...

Okay, so you have these cumulative exceptions that are ultimately the rule that make up the model that will be a standard.

Actually no. I've said repeatedly that there is no one big model. It depends on each provider individually. But there's a framework for how to build the models that work for them.

Re: Re: the Josh Freese model and Techdirt

Okay, this'll be a last one, so if you want the final word just speak up.

My time costs money.

Again, finding time to repeat what we've said 100 times isn't a good use of my time, frankly. But I am serious -- we've discussed lots of models that don't involve touring, and with a little imagination, you can figure out how to apply them to your model as well.

I'll let the reader decide if you're getting more value for your money by engaging in ill-considered attacks on people who are attempting to engage in dialog than you might by simply cutting and pasting material you should already have on hand to send to prospective marks, uh, clients.

Okay, so you have these cumulative exceptions that are ultimately the rule that make up the model that will be a standard.

Actually no. I've said repeatedly that there is no one big model. It depends on each provider individually. But there's a framework for how to build the models that work for them.

Your argument is with your own rhetoric, not me. I was just quoting. If what you said is meaningless that's your problem.

Three final points:

a) At this point about half of the dozen posts for Techdirt each day are the same -- some bozo does something wrong, and you guys are here to righteously ridicule and set them straight. The only difference is who the spew is aimed at, and a couple of details. I'm sure it provides a much-needed ego boost, but it's so close to the crackpot model that even a moron in a hurry would have trouble telling the difference. I would think you would be bored by now, but you must value your time differently than I. (All my work here is pro bono.)

b) I saw a reference in one of your posts in the last couple of weeks to the real value of the dialogs you get into here in the comments section, and how they give you new information and new ideas. Now, I typically read via RSS, and my response to that statement was Wha?! Aren't the comment threads just full of accusations and tripe? Nobody at Techdirt ever changes their mind, do they? So I checked this post out to see if I was missing something. It took two go-rounds just to get you to answer a question, and you did that only accidentally. That's a fail in my book.

c) There was this website called Techdirt. They were real good at telling you that you had to consider your web presence as publicity to people who were or could be customers, and that knee-jerk reactions that insulted your readers would have heavy effects on your reputation. (Whatever happened to them?)

I hope you-all had a nice holiday, and will have a great summer.

ps: I happen to be doing a number of Magcloud projects and have some very interesting ideas for HP about new uses for their system. But since it seems likely that your Insight Community will have the same attitude as your website, I don't see any value to myself in sharing them. Congratulations, and here's hoping you'll be walking again soon...